Cardano (ADA): First Look

April 5, 2022

What is Cardano? 

Cardano is a proof-of-stake blockchain that aims to solve the three most crucial issues all blockchains face by adopting scientific rigor to its development. First, each feature must go through a peer-review process by scientists and programmers to achieve an academic level of quality.

Quick Takes

  • The maximum supply of ADA is 45 Billion
  • Current circulating supply of ~33 billion ADA
  • Monetary expansion is set at 0.3% per epoch
  • No slashing applied due to the Ouroboros protocol

What are the three issues Cardano tries to address? 

Scalability: To achieve mass adoption, a network must be able to perform adequately to all its user-base, and that’s where scalability comes into play – networks that can’t scale properly face performance issues, slowed down transactions, higher fees, and overall a severe bottleneck situation.

Cardano confronts this problem by leaning into its own consensus algorithm – the Ouroboros protocol, which uses a Proof of Stake framework to enable a faster and energy efficient transaction processing. In addition, the protocol guarantees honesty and decentralization by implementing an unbiased randomness factor to the protocol’s leader selection algorithm.

To understand more about how Ouroboros works, check out Cardano’s documentation. You can also read more about several Ouroboros upgrades here.

Combined with Ouroboros, Cardano also uses the Recursive InterNetwork Architecture (RINA), an innovative network architecture that also enhances the network’s scalability power.

Interoperability: Interoperability, in simple terms, is the ability of different systems to communicate and interact with one another. Without interoperability between blockchains, users end up having asset islands and by consequence, siloed value; one part cannot interact significantly with another. With an ecosystem as vast and diverse as web3, interoperability is essential.

Cardano attempts to solve this dilemma by implementing side chains in its architecture. Because side chains run concurrently but independently from each other and the main chain, they allow the transfer of data between multiple parties that operate in different systems and mechanisms.

Sustainability: A heavily interdisciplinary field denotes a “system that is self-sustainable” – meaning a system that can grow, develop and maintain long-term vitality. Any economic engine must ensure its sustainability over time, otherwise the entire system and anything built upon it could eventually crumble and lose purpose..

Cardano approaches the topic by providing a truly decentralized governance structure that incentivizes participation and promotes engagement from its stakeholders.

The community has a say in how the blockchain develops and matures; members have control over the treasury, earn rewards by securing the network through staking and are able to propose system changes, features and improvements.

Use Cases

Cardano provides an open-source platform for builders and developers to create decentralized applications (dApps) and protocols that operate via smart contracts. As a public distributed ledger, it offers a secure, stable and trustless environment for the transaction of data, assets and any kind of value.

Interesting projects are being developed on the network, such as Atala PRISM; a new way of individuals owning their personal data by providing a safe digital identity storage that aims to facilitate information access and credentials verification.

Atala SCAN is another example, leveraging blockchain technology to address counterfeiting issues verifying and authenticating the origin of products – effectively guaranteeing transparency to all its stakeholders.

ADA & Tokenomics

The native ADA token is the utility token on the Cardano network and is used to pay for transactions, interact with applications, secure the network and participate in governance.

The maximum supply of ADA is 45 billion, and currently, there’s a circulation supply of ~33 billion ADA. Over time, new ADA will be minted at a decreasing rate so that the circulating supply can track against the maximum supply. The monetary expansion is currently at 0.3% per epoch, setting an annual inflation of ~2%.

To know more about the tokenomics of ADA and its initial supply distribution, read here.

Staking on Cardano

Cardano runs the Ouroboros protocol and therefore secures the network through staking. Nodes that validate and verify transactions on Cardano operate what are called “stake pools” – therefore being commonly referred to as “pool operators”.

Token holders can delegate their ADA tokens to any stake pool. By signaling trust to a determined pool and staking their tokens, holders earn rewards in proportion to the amount of stake delegated.

Pool operators receive compensation for operating a pool – there’s a fixed fee of 340 ADA set by the protocol that represents the costs of running a pool, and a variable percentage fee called “margin”, which can range from 0% to 100% and is set by the pool operator.

When the commission fee is set to 100%, it represents what we call a “private pool”, where the pool operator is staking and collecting rewards all by themselves. Delegators should look for public pools instead, usually having a fee set between 0%-10%.

Pools can become saturated when they reach a certain amount of stake. In that case any stake beyond the saturation point will not accrue rewards to disincentivize the centralization of resources. The saturation point for pools is determined by Cardano through a set of parameters and currently is 68mm ADA.


There’s no slashing on Cardano, thus, delegators’ stake are never at risk. There’s also no form of lock-up; token holders can re-delegate to different pools at any given time, or withdraw their tokens without an unbounding period.


Rewards come from transaction fees plus monetary expansion – a fixed percentage, currently set at 20%, is firstly subtracted from the monetary expansion as the treasury’s cut. Then, the remaining amount is allocated as epoch rewards.

After the first delegation, there’s a latency period of 15-20 days for stakers to start earning rewards. After that first settlement, rewards are distributed every 5 days and are automatically compounded.


Cardano uses on-chain governance and will distribute control in the Voltaire Era through a treasury system to vote on and fund the blockchain’s development. Any participant in the community can submit a Cardano improvement proposal (CIP) or a Funding Proposal (FP) – proposals on how to improve Cardano that are then voted on. Once a month, on-chain voting by token holders determines whether and where funds are allocated.

The Team

Cardano launched in September 2017, founded by Charles Hoskinson. Three main entities steer the development of Cardano.

One is the Cardano Foundation, a funded non-profit organization based in Switzerland that oversees the development of Cardano and its ecosystem; it also provides community support.

IOHK is a for-profit technology and engineering company that, together with several universities, executes the design and peer-review process to build and maintain the Cardano network.

Lastly, EMURGO is a multinational blockchain technology company; responsible for creating and managing commercial opportunities, and promoting the expansion of Cardano.

Cardano Roadmap

Cardano’s development has been mapped out into five phases, each one of them revolving around a core functionality of the network and steering the development efforts of that period.

Those stages are officially referred to as “eras” and each one is named after an influential historical figure.

  1. Foundation (Byron era): The Byron era arrived in September 2017 with the mainnet launch of the Cardano blockchain; it centered around setting up a strong foundation for Cardano and establishing its own community.
  2. Decentralization (Shelley era): The Shelley Era launched in July 2020, debuting the Ouroboros Proof-of-Stake (PoS) protocol, catalyzing more engagement from members and solidifying the community.
  3. Smart Contracts (Goguen era): The Goguen Era launched in March 2021 and represents a huge improvement in the protocol’s capability; it aims to add support for smart contracts and native token issuance.
  4. Scaling (Basho era): The Basho Era focuses on optimizing the network by enhancing its scalability and sustainability. Sidechains will be applied and interoperability improved.
  5. Governance (Voltaire era): The Voltaire Era is the final phase in Cardano’s roadmap. It will ensure an enhanced treasury and voting system, corroborating further with Cardano’s decentralization. This Era seeks to achieve the concept of a completely autonomous, decentralized and greatly scalable blockchain.

Interested in delegating ADA to Figment? Check out our Cardano landing page for more information.


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